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Why the high-tech forecast calls for clouds with a chance of profitability

You’ve heard of the cloud, but aren’t sure how it affects your business. Here’s the scoop

Sep 24, 2012

by Robin Schroffel

Illustration Gabe Wong

There’s something floating around out there that is changing the way businesses operate.

It’s called the cloud, and slowly but surely it’s replacing traditional business technology solutions like in-house data centres and software licensing. Cloud computing is quick to set up, costs a fraction of the price of traditional equivalents and allows people to access their data and software from anywhere they can get an Internet connection. Many businesses and organizations in Alberta, including the City of Edmonton and the University of Alberta, have already made the switch to the cloud.

“I truly believe this is revolutionary,” says John Shillington, vice-president of technology for the Alberta-based not-for-profit Cybera, which oversees the development of e-infrastructure in Alberta. “It will not go away.”

The cloud is a deceptively simple way of describing what amounts to a big, multifaceted, and somewhat confusing concept. Experts don’t always agree on its definition, but the underlying idea is that instead of purchasing your own equipment – a room full of computer servers, shrink-wrapped boxes of Microsoft Office and the like – you instead rent them as services over the Internet. Cloud services can include servers and storage, product development tools and software such as word processing and web-based email, which are known respectively (in cloud lingo) as Infrastructure as a Service (IaaS), Platform as a Service (PaaS) and Software as a Service (SaaS).
Still confused? Here’s what you need to know about the cloud, and how it can help make your business more profitable.

WHY?
Imagine being able to access all the technology your business needs without having to make costly up-front investments. Welcome to the cloud. “The cloud is basically a way for you to scale up your business without actually purchasing in advance the physical hardware and running it yourself,” Shillington says. First and foremost, it eliminates the need for a company to buy and maintain its own servers. Shillington says businesses pay between 10 and 30 cents an hour to use IaaS as opposed to spending thousands of dollars on computer equipment, security and maintenance. Better still, he estimates the setup time for cloud data storage can be as little as five minutes. “For a small business, the agility and the tiny investment that they’d have to make, it’s an incredible advantage,”
he says.

When Walter Schwabe, founder and chief evolution officer of social media strategy company fusedlogic, began to scale up his business in 2008, he went straight to the cloud. For the plugged-in, on-the-go, technology-based company, it made sense to have instant access to documents and projects even when away from the office. Rather than doing it the “old school” way, Schwabe pulled out his credit card and subscribed to a number of services that suited his needs, including products from Google Apps for Business, project management tool Basecamp and cloud storage service Dropbox. He estimates that he spends $75 a month for his four-person company to operate in the cloud. In comparison, it can cost more than that just to get a license for Microsoft Office 2010.

Schwabe appreciates the flexibility that subscribing to cloud services offers his business. Rather than having to wait to get back to the office to work on a project, he’s able to do it from anywhere. Fusedlogic regularly holds Google + Hangouts in place of team meetings, its employees collaborate on documents simultaneously through Google Docs, and Schwabe can edit and review documents on his iPhone.

Shillington also cites ease of maintenance as one of the cloud’s most attractive attributes. With any boxed software or in-house data centre, there is maintenance involved, including tasks like distributing patches and updates for software and troubleshooting server issues. But with cloud subscriptions, it’s all part of the package. It doesn’t even matter what operating system a user is on: the cloud works with everything.

WHEN?
It’s safe to say that the cloud is sticking around, and for many small- and medium-sized businesses it’s time to think about making the switch. “There are lots of opportunities for speeding up your time to market, reducing the amount of technological friction that it takes to get something done, and reducing your costs of operations,” Shillington says. While the cloud may not be all things to everyone, the services available are so diverse that the majority of companies can ultimately benefit from at least some part of the cloud.

And while companies that have already made large investments in servers and pricey software licenses may be reluctant to abandon their purchases, fusedlogic’s Schwabe makes a good point: yes, these are assets, but they’re also ones that are depreciating. Something as simple as switching to Google Docs – which allows multiple users to work on a document at once – can translate into instant bang for your buck, at least as far as wages are concerned.

HOW?
As with any major change to business operations, the switch to the cloud is best done gradually. The learning curve for the cloud isn’t particularly steep, but any overnight overhaul in the way things work has the potential to wreak havoc on a company.

Schwabe’s first move to bring fusedlogic into the cloud was to hold a brainstorming session, review how the company worked at that time and identify roadblocks to efficiency. He and his team pinpointed the tasks that seemed the most onerous and outdated, created a wish list for the ways they could potentially operate and looked at what similar businesses were doing. Next, the company checked out applications, searching for ones that would help to solve the problems they’d noted. Schwabe and his employees tried out a number of different solutions, found some applications they liked and stuck with them.

Shillington also advises taking a gradual approach to implementing cloud computing. One good first step, he says, is for a business to give its developers access to the cloud as a test environment for new products. “You could use the cloud to quickly and easily provide your developers with a playground without having to invest in a bunch of dedicated resources yourself,” he says. For its part, Cybera is putting together an incubator cloud designed to help Alberta businesses solve problems. “We’re trying to grease the skids and make it easier for people to recognize how to use the technology to make their businesses more profitable.”

WHO?
The cloud is a bit like a department store: there’s something for everyone. When it comes to businesses that are just starting up, Shillington feels it would have to be “very special circumstances” for the cloud not to be an option. Existing companies, especially those in the tech sector and businesses seeking increased mobility and ease of access, are also prime cloud candidates. Those storing extremely sensitive data might want to be cautious with the IaaS services, but SaaS is a viable option for any business looking to skip the expense and maintenance of boxed software, and PaaS can eliminate the need for dedicated development servers. The cloud is many things, and the beauty of it is that it’s cheap and easy to pick and choose only what you need.

Taste Test

Sampling what the cloud has to offer is easy, as many of the biggest names in the business offer free trials of their products. Google Apps for Business gives new users a free 30-day trial, and also offers trials on its BigQuery, Cloud Storage and App Engine services. Dropbox is free up to two GB, so it can be tried before users sign up for more substantial, paid accounts. Basecamp offers a 45-day free trial, and existing Amazon customers have automatic access to a five-GB Amazon Cloud Drive, which can easily be upgraded with a credit card.

Safety First

John Shillington may be enthusiastic about the potential of the cloud, but he isn’t ideological about its virtues. Sometimes, he says, the cloud isn’t always the solution, and that’s particularly true when it comes to the management and storage of data. Sensitive information that requires a high degree of security, such as health records, might be better kept locked down the old-fashioned way, but a health company can still benefit from doing product development or using cloud-based applications.

Those who prefer to keep their data in Canada should also look closely before subscribing to IaaS: many of the biggest providers are physically located in the U.S. There are ways around that, though: BlackBridge Networks in Lethbridge is just one example of a local IaaS provider, and servers in Canada are becoming increasingly common.

Then, there’s always the option of building your own cloud. Many businesses have set up private clouds, whether operated in-house or by a third party. Although the financial benefits aren’t necessarily the same as subscribing to services from a cloud provider, the scalability and time-to-market benefits remain – and you get the added security.

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